Mining projects are financed by numerous methods ranging from traditional project debt to alternative financing arrangements tied to metal prices.  A project’s ability to fulfill its financing obligations are often assessed with aa static cash flow model that calculates internal rate of return and financing ratios.  However, this modelling approach has a weakness in that investment performance and risk are not adequately assessed across a range of future possibilities.

Dynamic cash flow modelling is a framework that uses simulation, finance theory, and risk management concepts to consider a project and its financing across a range of possibilities.   This presentation analyses the financing for G Mining Venture’s Tocantinzinho Gold Project to understand how risk and return is distributed between equity, debt, and a stream.  It highlights how financing impacts the possibility of early closure and that the risk of some financing arrangements may differ from common industry perceptions.  Dynamic cash flow modelling is a powerful tool for designing a financing package that shares economic potential between stakeholders while recognizing exposure to financial market risk.

For more inforamtion:

https://www.smeannualconference.com/index.cfm/conference/program/technical-sessions-2023/